PHOENIX—BH Properties, a Los Angeles-based firm that specializes in acquiring and repositioning challenged or distressed real estate properties, has purchased the Papago Crossing apartments for $8.1 million. The move further advances the firm’s investment strategy in the region.
BH Properties has significantly expanded its Southwest portfolio, with primary sales spanning the multifamily and retail categories. Papago Crossing, which is located at 4530 E. McDowell Rd., marks the ninth multifamily property in Arizona that BH Properties has acquired in the last 24 months.
“We came into the Phoenix multifamily market in 2010,” Steve Jaffe, executive vice president and general counsel for BH Properties, tells GlobeSt.com. “We started with 330 units in Mesa and we’ve grown from there.”
Jaffe says Papago was strategically significant.
“We saw value in pricing. It’s well-located—it’s near the airport, which is important. It’s 90% leased. Our typical acquisition has a higher vacancy rate, but we saw an opportunity to push the rents.”
With steady job growth, Jaffe see an opportunity to cater to the local work force in the market. And BH will be making improvements to the facility.
“It’s got good bones. We’re going to improve the signage and other features—we’re excited about it. It’s still a challenge for the value-added investor. We are still finding opportunities, but they aren’t as prevalent as two years ago. Pricing has improved and rents haven’t had the same multiplier effect as pricing.”
Jaffe says as an investment, multifamily is solid. “It’s strong for us. We work hard on our reputation as a closer and this is a B- asset we think we can improve.
“The acquisition of Papago Crossing is consistent with our overall investment objectives for the region,” says Jaffe. “While the bulk of our investment strategy in Phoenix has been in multifamily, we’re branching out and looking at more opportunities in retail and industrial markets; in fact we just recently completed sizeable retail transactions in the area as well.”
The firm has just completed its fourth retail transaction in Arizona, including Ross Plaza in North Phoenix and Gilbert Town Center, a Class A retail center in Gilbert.
The all-cash transaction was brokered by Tyler Andersen, Sean Cunningham, Asher Gunter and Matt Pesch of CBRE Phoenix.